Australia: Woolworths, Coles Sued Over 'Illusory' Discounts
Australia: Woolworths, Coles Sued Over 'Illusory' Discounts
The Facts
The Australian Competition and Consumer Commission has taken legal action against Woolworths and Coles, the country's two largest supermarket chains, for allegedly deceiving customers with fake discounts.The Australian Competition and Consumer Commission has taken legal action against Woolworths and Coles, the country's two largest supermarket chains, for allegedly deceiving customers with discount pricing.
In separate lawsuits, Australia's consumer watchdog said Woolworths and Coles held prices steady on tens of millions of products for up to two years, then inflated them before placing them in Woolworths' "Prices Dropped" and Coles' "Down, Down" promotions.
The Spin
This is a massive corporate character failure. Australia's duopoly of grocery store giants abused market power to raise prices at a time when interest rates had also risen sharply, leading to higher inflation. WoolworthsThe and Coleschains' deception pattern underlines the need to impose a mandatory code of conduct and millions of dollars in fines for breaches and give the competition regulator stronger powers to break up uncompetitive industries. Potential penalties on Woolworths and Coles would deter all retailers from indulging in price gouging and ensure that Australian shoppers aren't cheated in the future.
The competition regulator's decision to sue Woolworths and Coles is discriminatory, partisan, and market-unfriendly. Supermarkets aren't charitable organizations, yet they offer promotional programs to provide everyday value and lower prices to customers as well as strive to manage the impact of cost price increases on their profit margin. Instead of enforcing a mandatory code of conduct and forcing businesses to sell some of their assets to reduce their market power, regulators should address the structural imbalances in Australia's supermarket sector and devise a mechanism to effect meaningful change in the marketplace.
